BAT: “Stamp Duty Will Choke Profits”

British American Tobacco (BAT) has come out and said that the new stamp duty national treasury cabinet secretary Henry Rotich slapped on the cigarette industry this March, increasing it from Sh1.50 per packet to Sh2.80, is punitive as the fee has been increased by an unprecedented 87%. According to BAT, the tax stamps will now represent up to 60% of the cost of cigarette wrapping materials, up from 15%.

“The impact of this increment will be detrimental to the industry as a whole,” the company said. “This cost translates into Sh351 million or 26% increase in BAT’s cost of doing business, which is unsustainable in an already heavily taxed industry.”

BAT has petitioned the government to reduce the stamp duty, saying they were not involved in discussions on the new tax, causing the Kenya revenue authority to be summoned to parliament on June 8 to explain why they did not allow for participation and to defend the new duty. The meeting, however, did not happen as some MPs failed to show up, claiming party functions and asking for the meeting to be postponed. A new date has not been set.